Accounting Study Guide by AccountingInfo.com

Further Analysis of Transactions

Summary of Transactions from previous file.

No. Date Transactions

(1) May 1 Owner invested $20,000 in the company.

(2) May 3 Borrowed $10,000 from a bank.

(3) May 6 Purchased $15,000 equipment in cash.

(4) May 8 Purchased $9,000 merchandise (900 units) on credit.

(5) May 15 Sold 500 units of merchandise at the price of $11,000.
Customer paid $8,000 in cash at the time of sale.

(6) May 25 Paid $2,500 salaries.

(7) May 26 Paid $1,500 rent.

Summary of Journal Entries from previous file.

No.	Journal Entries		Debit	Credit

(1)	Cash		10,000
(1)		Owner's Equity		10,000
	Owner invested $10,000 in the company.

(2)	Cash		20,000
(2)		Borrowings		20,000
	Borrowed $20,000.

(3)	Equipment		12,000
(3)		Cash		12,000
	Purchased $12,000 equipment in cash.

(4)	Merchandise		6,000
(4)		Accounts Payable		6,000
	Purchased $6,000 merchandise on credit.

(5)-1	Cash		9,000
(5)-1	Accounts Receivable		2,000
(5)-1		Sales		11,000
	Sold merchandise at $11,000 price and received $9,000 in cash.

(5)-2	Cost of Goods Sold		5,000
(5)-2		Merchandise		5,000
	To record the cost of goods sold ($5,000 merchandise).

(6)	Salaries Expense		2,500
(6)		Cash		3,500
	Paid $2,500 salaries.

(7)	Rent Expense		1,500
(7)		Cash		1,500
	Paid $1,500 rent.

Calculating Accounting Balances

Cash

Debit

Credit

(1)	10,000	(3)	12,000
(2)	20,000	(6)	2,500
(5)-1	9,000	(7)	1,500

Balance	23,000

Accounts Receivable

Debit

Credit

(5)-1	2,000

Balance	2,000

Merchandise

Debit

Credit

(4)	6,000	(5)-2	5,000

Balance	1,000

Equipment

Debit

Credit

(3)	12,000

Balance	12,000

Accounts Payable

Debit

Credit

		(4)	6,000

		Balance	6,000

Sales

Debit

Credit

		(5)-1	11,000

		Balance	11,000

Cost of Goods Sold

Debit

Credit

(5)-2	5,000

Balance	5,000

Salaries Expense

Debit

Credit

(6)	2,500

Balance	2,500

Rent Expense

Debit

Credit

(7)	1,500

Balance	1,500

Balance Sheet and Income Statement

Balance Sheet
As of May 31, 20XX

Assets

Liabilities and Owner's Equity

Cash	$ 23,000	Accounts Payable	$ 6,000
Accounts Receivable	2,000	Borrowings	20,000
Merchandise	1,000
Equipment	12,000	Owner's Equity	12,000	*(1)**

Total Assets	$ 38,000	Total Liabilities and Owner's Equity	$ 38,000

Income Statement
For the Period from May 1 to May 31, 20XX

Revenue
Sales	$ 11,000
Total Revenue		$ 11,000

Expenses
Cost of Goods Sold	$ 5,000
Salaries Expense	2,500
Rent Expense	1,500
Total Expenses		9,000

Net Income		$ 2,000	*(2)**

(*1) Owner's Equity=Investment by Owner+Net Income=$10,000+$2,000=$12,000
(*2) Net Income = Total Revenue - Total Expenses = $11,000 - $9,000 = $2,000

Review of Accounting Topics

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